Oilman: Bakken holds 20 billion barrels of oilBISMARCK, N.D. (AP) — Billionaire oilman Harold Hamm told North Dakota bankers on Thursday that government estimates of recoverable oil in the Bakken and Three Forks formations are too conservative.
Hamm, 64, chairman and chief executive officer of Continental Resources Inc., said the formations in North Dakota and Montana hold about 20 billion barrels of recoverable crude, or about five times the amount previously estimated by federal geologists. The formations also hold the natural gas equivalent of 4 billion barrels of oil, he said.
"This is something that is totally incredible," Hamm told about 200 bankers who had gathered in Bismarck for a conference. "Everywhere you look the Bakken is front and center."
The U.S. Geological Survey released a study in 2008 that estimated that up to 4.3 billion barrels of oil can be recovered in the Bakken. USGS geologist Rich Pollastro said the agency hasn't seen enough data to amend its estimate.
"We think our numbers are fine," Pollastro said Thursday. "We don't see anything at this point that would radically change them."
A state study released after the USGS study found a near identical assessment as the federal report. The state has since bumped its estimate to about 11 billion barrels of oil, based on drilling success and current production rates.
Ed Murphy, the state geologist and director of the Geological Survey, said Continental's new estimate is possible.
"We know the Bakken is going up but we think (Continental's) estimate might be on the high end of what we would potentially come up with," Murphy said.
Hamm's Enid, Okla.-based company is one the oldest and biggest operators in North Dakota's booming oil patch, which incorporates most of the Bakken and underlying Three Forks formations. Continental did its own assessment of the formations, using company geologists and analysts.
"We feel we are as capable as anyone to do it," Hamm told The Associated Press.
Hamm's company is the largest leaseholder in the Bakken shale formation, with more than 864,000 acres in North Dakota and Montana. The company, which has been drilling in North Dakota for 22 years, was among the first to tap a Bakken well in 2004 using horizontal drilling technology. The company was the first to drill a horizontal well in Three Forks formation in 2008.
Hamm told the AP that government assessments done on the Bakken used production numbers when the oil play was in its infancy. The study also based its estimate on technology used at that time, which is now outdated.
"The technology continues to improve," Hamm said.
Hamm called his company's assessment "believable" and could mean production at 1 million barrels daily by 2020. He told bankers that would make North Dakota "one of the 13 or 14 largest producing countries — not just state."
Hamm said his company has operations in 20 states but North Dakota is its most important at present. The company extracted about 15.8 million barrels of oil from the Bakken and Three Forks in 2010, up from 5.1 million barrels in 2007. About 75 percent of the oil came from North Dakota, where the company has 22 rigs drilling at present.
Hamm ranked as the 44th-richest American last year, with a net worth of nearly $6 billion, by Forbes magazine estimates. In 2007, Hamm was listed as No. 108 with $3.2 billion.
Continental plans to invest $955 million in drilling operations in the Bakken and Three Forks this year, adding about 120 wells to the 257 currently producing, the company said.